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Finance :money_with_wings: FFA - Coggle Diagram
Finance :money_with_wings: FFA
Formulas
Assets = Liabilities + Equity
L = Accounts payable nad other depts
E = Owners financial intrest
A = Cash and other possessions
Theory
Graphs
Double entry system
Cash payment
: business buys goods for cash
Goods in
Cash out
Receivable Transactions
: Business sells goods on open account
goods out
Accounts receivable in
cash received
: business sells goods for cash
cash in
goods out
Payable Transaction
: Business buys goods on open account
Goods out
Accounts payable in
Debits and Credits
Liability
Debit = Decrease
Credit = Increase
Retained earinings
Expenses -
Dividends -
Revenues +
Asset
Credit = Decrease
Debit = increase
Accounting uses
position analysis
: shows the current financial situation
Liquidity assessment
: managing cash flow
Performance measurement
: how well is the business preforming
Financing
: securing finance by providing documentation
management decisions
: accounting information helps management evaluating a range of decisions
Internal control
: protection of valuable assets
Planning
; plan to use limited recourses like labour, cash using budgets
accountability
: basis for assessing performance
Recording
: keeping track of all sales & purchase
Legal compliance
: law requires to keep accurate financial records
users
: fulfils the information needs for a diverse group of stakeholders
external
Managers
Monitor
Plan
Owners
Profit
Risk
Performance
Employees
Job security
Reporting
Internal
Government
Monitor compliance of regulations
Tax Authorities
Accuracy of tax returns
Auditors
inspecting accounting records
Customers
Continuity of supply
Public
Suppliers
Credit worthyness
Investors
Risk
Profitability
Performance
Lenders
Bookkeeping accounts
Equity
Additional Paid-in capital
Retained Earnings
Commen stock issued
Revenue
Food sales
Beverage sales
Room sales
Liabilaties
Accrued payroll tax
advance deposits
Accrued payroll
current maturities of long term dept
Income taxes payable
notes payable
sales tax payable
mortgage payable
Accounts payable
Expenses
advertising
telephone
supplies
utilities
employee benefits
rent
Payroll taxes
property insurance
interest
income taxes
salaries and wages
Beverage purchases
Food pucrases
Assets
Prepaid insurance
Prepaid rent
Supply inventory
Land
Beverage inventory
Building
Food inventory
Equipment
Accounts receivable
Security deposits
Marketing securaties
Cash
The Three basic objectives of every hospitality business
Profitability
the ability to generate net income
Having a positive cash flow
Solvency
the ability to pay depts in time
defenitions
Accounting records
: accounting involves recording business transactions, analysing business reports and records and producing reliable information
Business transactions
: sales, purchases, payroll and other income expenses/ exchange of merchandise property or services for cash
account payable
: if something is bought on an open account
account receivable
: a customer has bought something with a promise to pay
Cash
: Cash on hand, in custody of cashiers and other employees, cash in the bank
Notes receivable
: a formal written promise to pay (accounts receivable)
GAAP
: Generally Accepted Accounting Principals
Principle of Prudence
Principle of Continuity
Principle of Non-Compensation
Principle of Periodicity
Principle of Permanence of Methods
Principle of Materiality
Principle of Sincerity
Principle of Utmost Good Faith
Principle of Consistency
Principle of Regularity
IFRS
: International Financial Reporting Standarts
Balance sheets
(Statement of financial position)
Must always balance
It reflect state the current state of the company
What the company ows
what the owners have invested
What the company earns
Income statement
result of a period of time
usually a month
Statement of cash flow
a key to excellent comunication
provides detail for a reader of a financial statement
shows in and outflows of cash